CROSSROADS TO SOMEWHERE: What Happens Now That Ensign/Keiro Is Kaput?

“I don’t know squat” is the crude but straightforward answer I give to anyone who asks the hot button question, “What’s going on at Keiro?”

CR2S is not a NSA wannabe nor a minor-league Wiki-leak. I don’t have a secret information source, no Boyle Avenue Deep Throat. All I know (for certain) is Keiro Senior HealthCare remains (temporarily) intact, albeit with tamago (egg) on its face.

It was announced last week that the State Attorney General’s Office had put the kibosh on the ballyhooed proposal of Ensign Group buying Keiro. This totally unexpected turn of events sent shockwaves through a Japanese American community that was already immersed in worry and doubt because of lingering questions and rampant rumors. Unfortunately, we return to square one with the immediate future again a great big question mark.

[If you’ve been out of the country or more interested in “Dancing with the Stars,” a brief summary is in order: Keiro had been in serious negotiations with Ensign Group (a healthcare conglomerate listed on NASDAQ), which had been selected “the best” takeover candidate after a lengthy search process was conducted. Announcement that an agreement had been reached was made in July with escrow proceedings assumed a matter of formality; likewise the approval of the State Attorney General’s Office, a requirement when a for-profit takes over a non-profit. The transformation was in high gear with EG reps checking operations at Lincoln Park and South Bay Nursing Homes, Intermediate Care Facility (ICF) and Keiro Retirement Home (KRH). Their CEO even addressed residents at an open forum, boasting of ELA roots and promising a continuation of existing programs and operations; even agreeing to retain Keiro as its identity after meeting with resistance to a proposed name change. To say the deal going down in flames was a bombshell would be an understatement.]

Let’s try to sort out some of the surprising turn of events. A necessity since an official pronouncement has not been forthcoming from either Ensign Group or Keiro (as this is being written Tuesday a.m.).

A logical start is the letter of denial: “The Office of the Attorney General hereby denies the waiver request and consent of . . . (a list of Keiro holdings) . . . as described in the notice submitted on July 8, 2014. It does so under the authority set forth in Corporations Code Section 5914 et seq [Latin for what follows].”

The correspondence tersely stated: “We have concluded that this proposed sale is not in the public interest.”

The Rafu Shimpo was provided a copy of the letter by the attorney general’s press secretary, who in turn would not elaborate on the public interest stipulation.

Maybe there was a non-disclosure agreement between the principals just in case such an unexpected embarrassment transpired; call it a mutual pie-in-the-face pact. Ensign Group carried the burden of proof and was the denied; Keiro, while not exactly an innocent bystander, winds up red-faced and mortified. Whether Ensign Group’s past history as a *federal lawbreaker may have played a role in the AG’s decision — an educated guess — is moot. Since a specific reason for denial was not cited, two lawsuits settled in 2006 could have been influencing factors.It is public record that Ensign Group paid a $48 million fine to settle two whistle-blower lawsuits that alleged Medicare billing fraud at six of its Southern California facilities. [*Note: The first thing CR2S received after the EG/Keiro agreement was announced? A story about the government’s case that resulted in the penalty.]

Nothing has been said for the record, so I’m guessing Keiro has jump-started the search for another acceptable marriage partner. Before the trumpets blared (prematurely) on behalf of EG as the chosen one, there were a couple of dozen tentative prospects. This wish list was whittled down to a viable ten, then eventually to a competitive two (or three). The pregnant question now is how to win back Potential Buyer #2, the rejected suitor. Or find a new one.

Although falling way short of being Nostradamus, CR2S figures the Keiro brain trust will be extra careful in its renewed search. Due diligence comes to mind, but let’s not trod on the downtrodden. Everything was copacetic and everybody was smiley face when the takeover was in full bloom. Now mum’s the word and we don’t mean flowers or champagne.

The exact dates of who knew what when are interesting. The manner in which Ensign announced the rejection was belated and rather cavalier, as if it was no big deal. Also what took them so long to make it public? Keiro’s current stance of silence is equally puzzling. It’s probably safe to assume there was an appeal process — and equally obvious it was turned down. But why no clarifying (comforting) words for a bewildered public? $upport will obviously never return to pre-sale status, but it remains an unmatched iconic community treasure. And CR2S continues to wonder: What was the agreed upon purchase price?

Nisei are proud and resilient and all that glorified jazz, but Crossroads to Somewhere is befuddled and going nowhere on this one.

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W.T. Wimpy Hiroto can be reached at [email protected] Opinions expressed in this column are not necessarily those of The Rafu Shimpo.

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